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Illustration: Sarah Grillo/Axios

Ten years ago, hubristic Wall Street geniuses came this close to destroying the global economy, saved largely by the Fed feeding trillions of dollars into banks in the U.S. and around the world.

Why it matters: This time, unlike in 2008 and 2009, it may be that no one comes to the rescue, given new U.S.-China tensions, frayed trans-Atlantic relations, and Trump Administration hostility to multi-lateral actions.

The 2008 financial crisis is not really over: Even as the U.S. stock market bull run made history today, the crash continues to reverberate in the form of still-recovering economies and massive global distrust in institutions.

  • The memory and residue of the crash are primary reasons why economists and policymakers are on the lookout for the next big financial crisis.
  • If a new crisis is brewing, it's in emerging markets, says Adam Tooze, a Columbia university professor and author of Crashed, a history of the 2008 financial crisis. Emerging economy stock markets are already down about 10% this year in aggregate.

The background: The financial crisis was triggered by U.S. mortgage defaults, which exposed the folly of trillions of dollars in exotic financial instruments packaged, sold and resold to investors and banks around the world. But even banks with no mortgage exposure ended up in trouble when global interbank lending dried up.

  • What makes the story chilling and gives it continued relevance is the degree to which global banking was and continues to be hugely intermeshed — and how it relies to even a greater degree on the U.S. and the dollar.

I caught up with Tooze by phone on his U.K. book tour. The new problem is China, which just by 2015 had borrowed $1.7 trillion in foreign currency, mostly in dollars, to finance its investments.

Tooze called China "the hub of a complex of emerging market economies," with connected manufacturing and other supply lines, commodity and product sales, and countless other businesses relying on the yuan.

  • A big danger is movements in the yuan, he said. "One of the nightmares is that China would allow its currency to move dramatically and bring down all of the emerging markets," he said.
  • Emerging market economies, he said, do not have the same cash reserves as China to tide them through a devaluation crisis, he said.
  • Already, the yuan has devalued by about 10% against the dollar this year. "We are probably testing the limits and the world is watching anxiously," he said.

Go deeper

Biden condemns Russian aggression on 7th anniversary of Crimea annexation

Putin giving a speech in Sevastapol, Crimea, in 2020. Photo: Mikhail Svetlov/Getty Images

President Biden reaffirmed U.S. support for the people of Ukraine and vowed to hold Russia accountable for its aggression in a statement on Friday, the 7th anniversary of Russia's 2014 invasion of Crimea.

Why it matters: The statement reflects the aggressive approach Biden is taking to Russia, which he classified on the campaign trail as an "opponent" and "the biggest threat" to U.S. security and alliances.

Erica Pandey, author of @Work
3 hours ago - Economy & Business

What's really going on with the labor market

Source: YCharts

The labor market is showing some signs of improvement: Jobless claims fell to 730,000 — a dramatic drop from 841,000 the previous week. And the latest jobs report showed a pandemic-era low unemployment rate of 6.3%

But, but, but: That's not the full story, experts say.

Felix Salmon, author of Capital
3 hours ago - Economy & Business

Markets see rare convergence milestone

Expand chart
Data: YCharts; Chart: Axios Visuals

A milestone was reached in the markets Thursday: The yield on the 10-year Treasury note rose to match the dividend yield on the S&P 500

Why it matters: The two yields have been inverted since the beginning of last year, which is historically unusual.